Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

College algebra, Sam has grades of 96,88,86, and 92 on his first four exams...

Sam has grades of 96,88,86, and 92 on his first four exams. What score does he need on his final exam to have an average of at least 90?

Introduction to market positioning, Positioning: Meaning and definitio...

Positioning: Meaning and definitions: positioning is a platform for the brand. It facilitates the brand of to get the target consumer. Positioning is the act of fixing the lo

Brand promotion, Can brand promotion technique benefit an organization by i...

Can brand promotion technique benefit an organization by increasing its sales or hitting competitive brands may leave a negative impression on the customers?

Buying decision making process, Buying decision making process: Mark...

Buying decision making process: Marketers have to go beyond the various influences on buyers and develop an understanding of how consumers actually make their buying decisio

How you will evaluate the broadcast of ads, How you will evaluate the broad...

How you will evaluate the broadcast, print & support media. Evaluation of Advertising Media: PRINT MEDIA:- Print media is as well known as press advertising. It is one of th

Objectives of the personal selling, Objectives of the personal selling: pe...

Objectives of the personal selling: personal selling has two types of objectives - long termand short term. The long term objectives, which are more or less permanent, are braoder

What is media planning and strategy, Q. What is media planning and Strategy...

Q. What is media planning and Strategy. How you will evaluate the broadcast, print & support media. Answer: Introduction:- Media plan make a decisions how advertising time an

What points are really matters while doing marketing, What points are reall...

What points are really matters while doing marketing? Whether online or offline, there are only two objects that important: “Buying and Selling”. Fundamentally to simplify, thi

What are the three stage channel of distribution, Three stage channel of di...

Three stage channel of distribution When number of wholesalers used is large and they are scattered throughout the country, manufacturers often use the services of mercant

Costing and qualtrics questionnaire, How do I work out the costings for the...

How do I work out the costings for the rsearch and how many questions should I be asking for a telephone interview?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd